Going “Back to the Future” as PLM Sales Strengthen

After a less-than-exciting 2009, the global product lifecycle management (PLM) business bounced back in 2010 with surprisingly consistent gains. In two of the three main PLM market segments that CIMdata (cimdata.com) tracks, growth for the year was just shy of 10%. Worldwide industry sales reached $25.8-billion for the year, almost reaching 2008’s record of $26.3-billion. We apply the label “Back to the Future” because the bounce-back brightens and strengthens the future of PLM, while fostering innovation. A second reason for the label is that the latest computing architectures-workforce mobility, and the Cloud and Software as a Service (SaaS)-take some of us back to yesteryear’s client/server and mainframe timesharing platforms. For both, we can say objectively that the more things change, the more they stay the same.

In technology, as in fashion and culture, what is old is new again with, of course, a twist. Computing power moved from mainframes and minicomputers to the desktop in the 1980s, the ’90s and the ’00s; the “dumb” terminal was replaced by the workstation. Now computational power is moving off the desktop again. The twist is that this time the bits and bytes are entrusted to the Cloud, tens of thousands of secure, remote servers and encrypted broadband connections. For the corporate world, this change is fundamental, but often unsettling. Those who create information and intellectual assets are being asked to cede partial control to outside organizations such as Amazon, IBM, Microsoft, AT&T, Verizon, Cisco, others offering services in the Cloud. Since glitches and outages do happen, service level agreements (SLAs) again assume crucial importance as they did in the day of the mainframe.

In addition to the strengthened sales (which has continued into 2011), it is worth noting growth was generally higher in software licenses than in services. The good news for vendors is that service and maintenance revenues from a client usually grow for several years after a license is initially purchase. Breaking down the market, CIMdata found sales rose by:

• 10.1% to $8.7-billion for collaborative Product Definition management or cPDm component of the overall PLM market. cPDm includes product data management (PDM) and engineering document management (EDM) and various supporting solutions, such as visualization technologies. PDM and EDM are project-oriented, operations-level software solutions. In many ways, they are forerunners to PLM as the enterprise solution. With varying degrees of connectivity, many companies maintain PDM and/or EDM systems alongside broader PLM installations.

• 5% to $474-million for digital manufacturing (DM). DM includes solutions that support the definition of an organization’s manufacturing processes.

 • 9.7% to $16.3-billion for PLM tools, various computer-aided simulation and analysis solutions and other tools that support the creation and refinement of product designs and related data.

Data from surveys, especially after peeling away the layers specific to industries, vendors, and geographies, can conceal as much as it reveals. Looking into the data, for example, reveals that growth was highest in the Asia-Pacific region. The data also show us that some PLM technology refresh programs are getting underway at several large OEM users, including Chrysler LLC and the Newport News Shipbuilding unit of General Dynamics Corp. At the same time, PLM penetration increased into companies such as Vera Bradley Sales LLC (women’s handbags and fashion accessories), Dow Corning (silicone materials and technology), and Thatcham (also known as the British Motor Insurance Repair Research Centre) that are outside PLM’s traditional market in mechanical manufacturing. There are also some structural and competitive changes underway in the marketplace:

• The enterprise level “fight” is far from over as major shifts are taking place in some accounts—even in the perceptions of PLM in entire industries.
• CAD data migration is no longer holding users back from a much-needed rethink of the major components in their PLM environments.
• In a number of industrial sectors (e.g., pharmaceutical and food and beverage), competitive focus is shifting away from the solution suppliers of pure document-management systems to more comprehensive PLM solutions.
• Outside the “traditional” PLM markets in manufacturing, growth is strong especially in the process-related industries, and in construction and infrastructure.

At the same time, the recession has led to widespread reductions in staffing throughout organizations of every type. Employees at every level are “doing more with less”—fewer resources, smaller budgets, and reduced access to knowledge due to cutbacks and early retirements. Losses of knowledge have, in some areas, cut deeply into domain expertise. The good news is that staff cuts have raised the importance of product and process innovation, always PLM strengths.

Because PLM “grew up” in mechanical manufacturing, many who could potentially derive great benefit from it have overlooked its value outside of “traditional” manufacturing. CIMdata research shows that PLM is being put to work on large buildings; bridges, highways and other public works projects; airport, railways and power-distribution infrastructure; corporate assets such as refineries, offshore production systems and drilling rigs; and even structured documents, insurance policies, for example. This expansion of the “P” in PLM is being driven by the need to get a better handle on the increased complexity associated with today’s intellectual property and similar assets throughout a product’s lifecycle.